By Trevor Hunnicutt
WASHINGTON -The Biden administration on Wednesday announced new steps to crack down on U.S. real estate appraisers who perpetuate property inequalities by assigning lower home price estimates to Black and Latino owners.
Mortgage finance agency Freddie Mac found in 2021 that Black and Latino people were more likely to have their homes valued under the agreed sales price than white homesellers.
Such an appraisal can limit the size of a mortgage that can be written on a property, forcing homeowners to sell at a lower price or cancel a sale altogether. It can also reduce the amount available during a refinancing.
“Bias in home valuations limits the ability of Black and brown families to enjoy the financial returns associated with homeownership, thereby contributing to the already sprawling racial wealth gap,” the White House said in a statement accompanying its new plan.
Senior administration officials said the aim is to bolster appraisal standards, increase the diversity of the workforce tasked with creating those estimates and make it easier to report discrimination that violates federal law.
Federal Housing Finance Agency Acting Director Sandra Thompson praised the road map, saying her organization “does not tolerate housing discrimination” and would remain focused on ensuring fair lending practices.
“Because their homes are undervalued, Black and Latino people often have to pay more for their mortgage, receive less when they sell their home, and are less able to access home equity lines of credit,” Vice President Kamala Harris said at a White House event to unveil the effort.
Federal officials say lower appraisals have contributed to wide gaps in wealth between Black and Latino Americans and their white peers. White applicants received appraisals lower than their contracted sales price 6.5% of the time, compared with 9.5% for Latino and 8.6% for Black applications, Freddie Mac found.
Last June, Joe Biden became the first sitting U.S. president to visit the Tulsa, Oklahoma, site where hundreds of Black Americans were massacred by a white mob in 1921, vowing in his speech to combat racial discrimination in housing and address biased home appraisals.
(Reporting by Trevor Hunnicutt; additional reporting by Susan Heavey; Editing by Heather Timmons, Karishma Singh and Jonathan Oatis)
